Accounts payable and receivable automation tools facilitate easier AP and AR processes management through a robust platform. Automation software provides clear visibility and better control over data collection and financial processes.
Studies show that about 55% of businesses use manual processes to handle financial data. However, over 40% of SMEs plan to adopt AP automation solutions. Now is the best time to explore the numerous benefits of automation and determine whether it’s appropriate for your organization.
1. Shorter Processing Times
AP and AR automation technology helps your team to process invoices faster. In the absence of automation, invoice processing can take as long as two weeks since the team must confirm the figures and get the necessary signatures for approval. On the other hand, automated AP solutions cut the processing time to as short as one day.
Invoice processing involves multiple stages, and you can use tools like OCR to scan and index your invoices and minimize manual data entry. Since the filing system is digitized, you don’t have to rummage through piles of paper to find a specific invoice. Most importantly, cloud storage allows business managers and department heads to access invoices in real-time for a quick approval.
2. Minimizing Human Errors
Manual invoice processing and data entry create room for errors. Whether it’s document misfiling, loss, or payment mistakes, errors can occur at any stage, and the reasons may not be easy to eliminate. Typically, AP and AR errors can cost your company in various ways. Backtracking and error resolution often consumes a lot of time that could be used to perform essential tasks. Additionally, human errors can lead to duplicate payments, overpayments, or compromise your reputation.
Erroneous invoices can cause unnecessary frustrations to your finance team and hamper effective communication. It’s crucial to have a reliable tool that validates entries and pinpoints errors. The automated AP system can identify inconsistencies and facilitate seamless collaboration among stakeholders through unrestricted access to files.
3. Better Oversight and Transparency
Manual filing processes are hectic, time-consuming, and often make it impossible to get a complete picture of the entire process. It’s easy to think that sophisticated automation tools will obscure operations visibility. However, these systems increase visibility by offering real-time access to data.
AP automation software gives you a comprehensive view of payment cycles to enhance oversight. For instance, you can identify critical constraints like payment delays and monitor the individuals responsible for approvals. Most importantly, real-time reporting and detailed oversight accelerates payment cycles to ensure your vendors are paid on time. In addition, the footprints left by the automated process make it easy to identify and expose fraudulent transactions and ensure sustainable financial growth.
The increase in transparency facilitates data-driven decisions on various business issues, including when to pay suppliers and how to achieve optimum efficiency when scaling operations.
4. Enhanced Compliance Monitoring and Efficient Process Control
Legal and regulations compliance and establishing trackable audit trails are some of the reasons why accounting professionals and financial advisors are essential to any business. When you don’t have the appropriate systems and tools to control business processes, there is a high chance you’ll overlook vital details like PayPal fees.
Since companies face numerous fraud-related issues, it’s essential to have a system that limits the use of specific functions or flag and report inappropriate processes. Automatic AR and AP software creates transaction archives that help track invoices, processing stages, and authorization rules for better compliance with IRS regulations. In addition, modern invoice management solutions have superior integration capabilities meaning you can link the tools with your accounting software for better process control.
5. Better Workplace Collaboration
Improving the speed and visibility of your invoice processing with a digital solution ensures that all parties involved in various processing stages have access to necessary files and data. This feature facilitates real-time collaboration and efficient file sharing for seamless workflows. Since the tools have cloud capabilities, team members and stakeholders can access invoices to clarify, dispute, or approve the process regardless of their location.
Typically, smooth workflows and consistent progress mean team members are less likely to experience frustrations that come with constant disputes. Also, process automation minimizes manual data entry, meaning your workers have enough time to consult the relevant departments and log critical discussions to solve discrepancies without much strife. Ideally, breaking down collaboration barriers in your organization increases worker satisfaction and performance.
6. Customizing Business Processes
You can enhance the productivity of your accounting department by customizing the invoicing process to fit the workflow requirements of your business. Most invoice automation software allows custom configurations to focus on specific areas that improve productivity. This means you can establish a growth-oriented workplace culture using digital solutions that are tailored to suit your specific AP processes.
If you get invoices through different channels like fax and email, capturing the data using OCR technology for rapid compiling may be the best option to improve productivity. On the other hand, if your invoices follow a unique route for approvals, you can customize the automatic workflow to follow a channel that saves the most time.
Most importantly, you can personalize the tools to balance employee workloads. For instance, you can channel invoices to multiple employees and share responsibilities or onboard more team members to projects with strict deadlines.
Manual handling of AP and AR is an intensive process that can leave your employees tired and frustrated, leading to numerous errors. Accounting departments realize these processes bring unnecessary burdens.
Automation eliminates most of the challenges of AP and AR processes, including human errors, processing time, and compliance to enhance productivity. As more finance departments adopt digital transformation, implementing AP and AR automation tools can give you a competitive edge.